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Automotive Service Revenue

New Smyrna CJD Aims to Double Service Revenue

The Three-Part Growth Equation to Their Success 

This article was originally published in Dealer Service Magazine

In November 2017, New Smyrna CJD moved into a brand new facility in New Smyrna Beach, FL. Built with the service customer experience in mind, the design is in stark contrast to the store’s old facility — and most other dealerships — which were built to optimize sales.

Before the move, General Manager Jack Holcomb identified service as one of the areas with the most potential for revenue growth. “My goal moving into this store was to double my service revenue,” he said.

One year later, YOY customer pay revenue is up 61 percent and YOY warranty pay is up 25 percent. Holcomb acknowledges the gains but says he won’t be satisfied until he reaches his goal.

The new service facility is only part of Holcomb’s growth plan. “I think our equation for growth is split into thirds: one-third facility, one-third technology and the other third people and processes — these together give us a chance to be better than average.”

The plan wasn’t always to build a new dealership but to remodel the old facility. “We tried to push a quick service process in there, but it didn’t flow right,” Holcomb said. “We ended up building a new store from the ground up.”

The new 47,000-square-foot dealership combines three service centers in one: a heavy-duty shop with seven bays, a regular shop with 24 bays and the Quick Service center with five lanes, allowing New Smyrna CJD to compete with independents. Customers can drive in any time, and oil changes are completed in 30 minutes or less.

The new facility was designed with customer expectations and their experience in mind. “Our goal: to get customers in and out in a timely manner.” Another priority was to design the shop facility to increase productivity. This included special lighting for better visibility and air-conditioning the entire shop.

“Six months out of the year, Florida is hot,” Holcomb said. “You can buy all the water and fans you want, but at the end of the day, my techs were fatigued. You lose a chunk of productivity that can’t be replaced.”

The shop design also included plate glass windows so that customers can see from the waiting room into the service bays, adding the element of transparency to build trust. “We make sure the back of the house is kept as clean as the front,” Holcomb said.

Currently, New Smyrna CJD averages 700 CP ROs per month, but there’s still plenty of room for growth. A large facility doesn’t fill itself, which is where technology comes into the equation.

Holcomb figured the new location would account for 30 percent of the new business they needed, and that process would have to do the rest. Improving process requires the ability to identify strengths and weaknesses, and to keep employees accountable. For someone who came up through sales, getting a handle on service processes can be challenging.

“I used to tour the shop, look at the numbers and talk to the service managers,” Holcomb said. “The conversations were always focused on results. We could only guess at ways to improve the outcomes.”

Holcomb knew the right technology would provide him with insights and data so he could run fixed ops similar to the way he runs sales. “I wanted a system that did it all, so I can see workflows and closing percentages and have some data to work with,” he said.

In the summer of 2017 and just months before the move, Holcomb selected the ELEAD service retention suite, Service1One. New Smyrna CJD is a longtime power user of ELEAD CRM and Reynolds and Reynolds DMS, so this new service technology initiative has overcome the expected challenges with culture, accountability and DMS barriers.

The service-driven suite provides tools for online scheduling, lane application, multi-point inspection (MPI), shop management, automated marketing and service advisor training. “It gives us the ability to view service performance in a centralized location, eliminating the need to log in and out of multiple dashboards to gather data,” Holcomb said.

Holcomb was able to pinpoint two problem areas right away: MPIs and customer communications.

As in most dealerships, techs at New Smyrna CJD are required to perform MPIs on all vehicles, and service advisors present the findings to customers. The first thing Holcomb noticed once Service1One was implemented was the average additional services recommendations (ASRs) per RO typically averaged two lines.

From working with NADA and service training companies, Holcomb knew that for vehicles with an average 60,000 miles, the number of ASRs per RO ranges from three to five. Vehicles brought into New Smyrna CJD average 58,000 miles.

Holcomb uses this data to encourage techs and advisors to improve their MPI process. “Now I’m now able to have a conversation (with the techs) about the process, not the results. I can be very specific,” he said.

“The goal is to get the techs and advisors trained to where they should be.” He acknowledges that advisors can be scared to sell. “It’s not the advisor’s job to determine what the customers might want to buy or not buy. It’s their job to present the findings to the customer in a knowledgeable manner to help them make a good decision. The work is there, and we were missing opportunities.”

Techs and service advisors at New Smyrna CJD now use mobile tablets for the write-up and inspection process. One advantage of an electronic MPI tool is that it prompts advisors to enter a declined services op code every time a customer turns down an ASR.

When Holcomb runs the labor op report, he can immediately see any lost opportunities. “Through October of this year, we’ve generated $2.6 million in ASRs,” he said. “We sold $1.1 million, but we’ve also identified $1.5 million that went unsold. We know the cars, the customers and the VINs. So now we have to figure out how to recapture that.”

Holcomb can also break down the same data into hours. “We’ve identified 12,000 hours, and we’ve sold 4,800. That’s 7,300 hours just sitting there. It’s an opportunity, just like an internet lead on the front end.”

Another process much improved is customer communications, thanks to the service platform’s integrated texting and video tools.

When Holcomb reviewed call tracking reports, he realized that many incoming service calls were from customers wanting to know the status of their vehicle. Now, every day at 11 a.m. Holcomb sends a reminder to the service advisors to send status updates to their customers.

“At first, my advisors said I was killing them with these emails,” Holcomb said. “Then they started doing it, and suddenly they were like, ‘this is the best thing ever!’ One of my advisors told me he now goes through his open ROs and fires out texts with status updates,” Holcomb said.

“The customers love it, and for the advisors, it’s so much faster than phone calls.”
The service advisors also use text and video to present MPI results to remote customers. Holcomb says the videos in particular show visual proof and help overcome customer skepticism. A typical video shows a worn part with the tech explaining why the repair needs to be done.

“With media attached to the MPI, we get a 7-percent higher close ratio,” Holcomb said. “The videos are invaluable, and really help build credibility.”

The third and final part of the equation for doubling service revenue is people, and their ability to adapt to new processes. Holcomb spent the last year coaching and cajoling his employees to get the necessary buy-in.
Previously, New Smyrna CJD’s service employees were measured on how many hours they sold, but now they’re graded on a variety of KPIs including MPI volume, ASR lines, closing percentages on individual labor ops and more.

Sometimes buy-in has to be earned. Holcomb identified one advisor with an 18-percent closing ratio on the four-tire labor op, by arranging for the advisor to get additional training on the significant safety concern of worn tires. Now that same advisor has a 54-percent close rate on the four-tire labor op. “When you show them the numbers and how they’ve improved, and they’re making more money because of it, that’s when the buy-in finally happens.”

Holcomb says that until he reaches his goal of doubling service revenue, he won’t be satisfied with the results. “We’ve had record-breaking months, and we’re reaching new goals all the time, but I’m not even close to where I want to be.”

However, he’s confident that data from the new service tool will provide a roadmap for reaching his goals. “I’ve never had a tool that shows us so much opportunity.”

This article was originally published in Dealer Service Magazine

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